More Money Podcast - 027 How to Be an Empowered Investor - Aman Raina, Investment Coach

Episode Date: November 18, 2015

Investment coach Aman Raina and I discuss how to be an empowered investor through financial education, changing habits and understanding your comfort zone. Long episode description: As I mentioned at the beginning of this episode, I found out about Aman because he commented on my blog post about money coaching. After that we exchanged a few emails and I knew I needed to talk to him a bit more so I got him on my podcast. Aman as a very interesting background. He worked on the TSX’s trading floor back in the 90s and has a wealth of knowledge when it comes to investments. Later in his career he decided to go it alone and start his own investment coaching business so he could teach others about the principles of investing wisely. Different than a financial advisor, an investment coach doesn’t sell you products or tell you specifically what to do. Instead, it’s more of a teacher role and Aman shares some of his top tips for those of you who want to learn more about becoming a savvy investor. I was lucky enough to meet Aman in person this fall at the Canadian Personal Finance Conference. He is seriously the nicest guy and super smart. He told me he was thinking of producing more videos for his company website, Sage Investors, and I guess he did because I found this gem! Props for getting jiggy with it Aman! https://www.youtube.com/watch?v=tiT2NFSX15A Shownotes: jessicamoorhouse.com/27 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, and welcome to episode 27 of the Mo Money Podcast. I'm your host, Jessica Moros. Thank you so much for joining me today. Very excited to talk to my next guest. His name is Amit Reina, and he is an investment analyst and investment coach. And it's kind of cool actually how he ended up on this podcast because he was reading my blog. Thank you. And he commented on a post, I think that the post that I was talking about, thinking about becoming a money coach, he commented on my blog, got to chatting and bam, he's on my podcast now. So we're going to be talking about how he went from working in the TSX to being his own investment coach. And the difference that I think the reason

I kind of wanted him on the show is to explore what an investment coach. And the difference that I think the reason I kind of wanted him on the show is to explore what an investment coach means. It's not an advisor. And I think that's kind of where people get a little bit confused. An investment coach more teaches people about the fundamentals of investing and personal finance so people can use those tools and be smarter investors themselves and not have to rely on an advisor to do all that legwork. So I'm very excited to talk about all this cool stuff coming up. Thank you, Amin, for joining me on the show today. Very good. Thank you for inviting me to your pod.

Your pod. Yeah. Thank you so much. Yeah. It's great to have you on the show. And thanks for reaching out. The reason that I asked you to be on the show, as you remember, is I wrote a blog post about money coaching because it's something that I'm interested in pursuing down the road and you commented on my blog. And I'm like, huh, this would be a good guy to chat with on my podcast. This is perfect. Sounds good. Yeah, yeah, definitely. Yeah. So let's kind of just jump into it. It seems kind of from your career timeline in school, you were always pretty interested in investing in personal finance, but kind of what, you know, how did you get interested in that? Oh boy. My journey is probably a lot different than a lot of other people that have kind of gone down the road of finance and personal finance.

It all started off nicely in that I went to school and did my undergrad in commerce. And I specialize in finance and accounting. So I took all the courses you needed to do to be a good finance, a good little finance boy. You know, your standard corporate finance and your tax courses and all your accounting courses, reading financial statements and everything like that. Did it. Went there. Did it. Done it.

And after that, after I finished my degree there, I decided because I thought it was a good time. A lot of things were fresh in my mind. I jumped on board and did the securities course, the Canadian securities course, which helped quite a bit in terms of understanding. It was just easier to do at the time. A lot of things fresh in your mind. And so when I finished it, actually, then my road kind of changed a bit. And I thought I would get into finance and, uh, and that side of it. But I found that my first job that I got out of university was more, uh, I was doing some

like, uh, basically cost accounting kind of stuff. Um, um, and I was working in Ottawa too, um, for, for, uh, I got like a basic contract kind of job. And, uh, it was just during that time, um, I had a chance to dabble in some uh programming and some uh programming and developing some kind of like software and stuff and i go and i go so i you know i knew nothing about any of this stuff so i was just totally like okay sure i'm out of school i'll just uh give it a go see how it goes and but it was a really you know matter of fact kind of chance thing that i thought this is really cool like if i kind of fact kind of chance thing that I thought, this is really cool. Like, if I kind of like, and I was able to put together like a little dorky little Excel

program that I could give to a bunch of engineers, and they could figure out how to cost a bunch of manufacturing processes and stuff. And so at the time, I thought, you know what, if I could combine, you know, if I can get a little bit more training on how to be like a programmer kind of thing, and understand the technology side, combine it with the business, my financial knowledge and everything that, you know, I could probably get a good gig out of that. Yeah. So I went back to school and I did like one of those little 12 month kind of IT kind of diploma kind of things. I learned a lot about programming and stuff. And that's kind of how I ended up, when I finished it, the first job I got out of it was with the Toronto Stock Exchange. And so this was at

the time, if anybody remembers, when there was actually a trading floor. Like, you know, if you remember the whole like Wall Street, Bay Street kind of vibe where you had a trading floor and there was a whole bunch of people yelling at each other and swearing at each other and buying and selling stocks, you know, just like our, like our parents, you know, would know about it and stuff. And so at the time when I started there, I was, uh, I got a chance to hang out on the trading floor. And this was the time when, if you remember, if your viewers remember or your, uh, listeners remember, uh, everything that happened with Breax. That stock, which was like one of the biggest, everybody wanted to own it. It was like a gold company. Let's say they discovered this huge mine in Indonesia and the stock was just flying.

It was going from like, you know, 50 cents to like $50. Wow. It was the Nortal-ish kind of stuff. And what year did that happen? That was probably 1997, 1998. So that was the time, and that was my first job, really, working on

Bay Street and everything. And, you know, it was a great time, but it was at the time they were actually, the trading floor was there, but then they were starting to wind it down. Right. Because everything was becoming about automated trading and technology and, you know, that kind of stuff. And it was less away from the human trading aspect of it. But, but it was my first, you know,

that was my foray into it. And when I got into it, you kind of like get into the, the vibe of the whole scene. And I thought, you know, I really like this kind of, I'd really like to, you know, being around that environment and being around the investing environment. I thought I'd try to learn a little bit more based on leveraged stuff that I learned from school and try to start investing for myself. So I started trying to look around for information on financial research, on companies and stocks and, you know, how to, how to pick stocks and stuff. And it's quite a, you know, the best place to do that was, was the Toronto Stock Exchange. Yeah, absolutely. I can imagine. You're like, got everything there for you at your fingertips. And, but what I found though, was a lot of that information and research

that you found out there, it was very, it wasn't very credible. Okay. There was a lot of biases and I was just seeing there's a lot of biases and conflicts that you find when you see, you know, analysts write reports and things like that. And I just didn't feel comfortable a lot of the information that I saw out there. And I said, you know what, there has to be a better way. There has to be a better way to do this. And so then I kind of flashback to when I was in school and my last year in university and we had to write a project on a financial and investment concept or topic. And so I picked one. It was called, I found out in Fortune magazine and it was all about economic value added. It's just another way that you can use, another measurement that you could use to measure the true performance of a company.

And the cool thing about it is it filters out a lot of the accounting hocus pocus and mumbo jumbo that you can use to manipulate your earnings and profits. And it gives you a much more pure assessment of a company. So I wrote a little dorky report, analyzed a bunch of companies, and gave it to my prof. And he told me, nice report, Amin, but it's probably just a fad. It's not going to amount to anything. So whatever. I got my mark, right? And all that.

So I moved on. And then a flash forward, the time when I was working at the Toronto TSX, I was in the library doing some research on some stuff, and I came across a report in a financial journal talking about economic value added. And it was talking about how it was one of the best ways to value and measure a company, and it's a much more effective way of picking stocks using this kind of format. And it was written by that same professor oh did he steal did he rip off your essay or you know what and you know i sat there and go this guy just steal my gig oh my god and i was just like really wow you gotta be kidding me so i'm going so at first i was like okay that's really bizarre yeah but then the next thing i thought you know over time i realized, you know what?

I'm having a hard time finding really cool, credible research or investment data or investment information. So I started taking that stuff that I learned, kind of polished it up a bit. And I kind of built up my own little database of companies, specifically, you know, Canadian companies because that's companies because that's where I was interested in at the time. And I built up a pretty big database of a lot of Canadian companies, most of the companies on the Toronto Stock Exchange. And it was at a point, like several years later, I just sort of decided, you know what? Like I've always had something, a fire in my belly to go out and do something on my own type thing. So after a few years, I basically decided, you know what? I'm going to take a shot.

And I basically went out on my own and kind of quit my job essentially and became my own – hung on my own shingle and started my own little consulting company really, specializing in investment research, investment analysis. And so I was doing quite a bit of work, you know, selling my research and working with individual portfolio managers to, you know, they're looking at doing specific analysis on different industries and things like that and companies. And so I would kind of help out and give some analysis and provide some analysis on that, which was cool. And it was kind of like, you know, that's kind of what I wanted to be into and what I wanted to do. So I thought, yeah. Um, but then over time I just,

you know, when I was working, most of my work that I was doing was more with the institutional side of things. And, uh, but the, I would always get questions from people, um, just, you know, run of the mill people about, you know, they would be sharing their experiences with me on how really they've been getting kind of screwed and ripped off on by their advisor or by a bank and their investments haven't been doing well and they've been struggling and they're just kind of drifting along and not really having any, feel like they're having any control or any, you know, a goal or an an endpoint with what they want – with their investment. They're working hard. They're saving all their money.

They're trying to do the right things. And at the end of the day, they're going, like, I'm not getting anywhere with this stuff. Yeah, I'm sure that's a sentiment that a lot of people listening right now can agree with, myself included. There's so many times where I'm like, I feel like I'm doing everything right. But then I look at my investments. I'm like, what the hell? I feel like they could be doing better. Exactly. And so, you know, I was always getting these questions and, you know, I would do my best to kind of, you know, answer it and try to give them some kind of, you know, direction on how to how to do things and stuff. But, you know, my focus was still really on the institutional side. And but over time, you know, then. But, you know, my focus was still really on the institutional side.

And, but over time, you know, then we had, you know, in 2000, we had the dot-com disaster. And then, you know, then we had the Asian crisis. And then, you know, in 2008, we had the financial crisis and, you know, stocks are getting, you know, there's just been crisis after crisis, after crisis. And people's portfolios have been shrinking and shrinking and shrinking. And it's just over time I just noticed people are just feeling so exasperated and helpless. Yep. And you say, you know, how do I change this? And what you've been seeing now over the last, you know, since maybe 10 years or so is just that emergence of people just saying, you know what? I'm not getting anywhere with the status quo and I'm going to start, I need to start empowering

myself and doing this stuff on my own. And I need to like, you know, whether I need to go out and read a book or take a course or go read a bunch of blogs or get on the internet and just people are just now starting to, or have been really empowering themselves to learn and make investment decisions for themselves i agree and that's that's a trend and it's it's continuing and you know i really don't see it changing any any difference so that's kind of like a little bit of the dynamic of the environment sort of like how the world's kind of evolved a little bit maybe the last 10 15 years 15 years. Absolutely. Bringing it back to me, I guess. I'm just the guy doing, as I'm seeing all this, I'm going to myself. As my career evolved, I kind of was working on the investment research side and consulting side,

but I was also splitting my time also being as a manager, as a project manager, doing some other stuff too on the side. And being a manager, you're in the people business, right? You're engaged with people and you're kind of developing a lot of – the goal as a manager is you want to get people to do things, right? And get to do things in a productive way. And there's the take out a whip and get people, whip people into shape to doing things, that management style. But then there's also what I've learned over that side of my career is that you can get people to do a lot more things through building relationships with them

and developing kind of a coaching relationship with them where you're not necessarily telling people, yo, go do this kind of thing, but you're kind of enabling people, engaging them, providing support, rather be emotional or technical kind of support to getting people to do things that they need to do. And so over time, I just kind of realized as I was building up this competency or this kind of skill set and seeing people struggling really with their investments and trying to make better investment decisions, I thought, you know what, maybe there's a way that I can leverage both kind of sides of the skill set, bringing kind of mending sort of the technical side of teaching people how to make, you know, the mechanics of investing and combine

that with sort of like a mentoring kind of building a mentoring kind of relationship through coaching that will kind of make people more aware of their behaviors with respect to how they make their decisions. And if you, I thought, you know, if you can combine those things, I think people can, um, it'll first of all, empower people more and I think make, help them make better investment decisions. And so over time I kind of sort of tweaked my approach and whittled myself away from the institutional crowd, the Bay Street crowd, and really started focusing more on, on individual people and groups that were investing but kind of needed somebody to kind of have that third party to bounce ideas on decisions that they're facing.

And that's kind of sort of the genesis of all the kind of investment coaching concept that I've essentially developed. And so I sort of morphed my practice away from investment research, but now to what I do now, which is investment coaching. Which I think is awesome because like, I completely agree with you. I feel like in the last decade, people are becoming more curious and trying to teach themselves and learn more about personal finance and investing. Because let's be honest, you know, most people are kind of unhappy with all these financial crises that have happened. They are seeing that they're not getting the bang for the buck that they thought. And, you know, usually, you know, back in the day, you were able to go to a normal institution and invest your money with a financial planner and you would be able to see results. But now you aren't and you're like, what am I using this guy for?

Maybe I should take the time and the energy to actually teach myself so I can get results myself. Yeah, and that's a question I always get back when I tell people what I do. And they say, well, I can just go to Indigo and there's like 500 investment books or personal finance books. And there's the internet and a whole mountain of information. And you can easily do that. I say, you know what? You're absolutely right. If you're motivated and committed and you've got the time for it, you can do that on your own. But a lot of times, a lot of people who are still venturing out on their own, they still need some kind of human interaction in a sense.

And a guide. I think that's definitely key. starting something new like an education in personal finance and you really don't know where to start, it's nice to have someone to be like, here are the starting points, here are things to consider to kind of just make the transition a little bit easier so they don't feel overwhelmed. And I think that's kind of the scary part about personal finance is it can be overwhelming. Yes. And see, the thing about personal finance, I almost think like I tell people like, you know, personal finance is almost like the game of thrones um when you think about it i don't know if you're into it but oh i love game of thrones like to me like

you have in game of thrones you have um king's landing yeah and you have winterfell you have all these little places right and there's so many of these places and there's so much stuff going on in all these places there's so many moving parts that trying to piece all together how all that stuff works is really hard. And to me, personal finance is like – essentially it's three kind of kingdoms. It's your saving kingdom. It's your debt management, your budgeting, debt management, I guess, kind of kingdom. And then there's your investment kingdom. And they're kind of moving parts. They're all like moving parts. And it's really hard to kind of juggle them all in a very seamless, interactive way.

Yeah. It's very hard to find that balance. And that's like, I think, just like an everlasting struggle. You'll always try to find balance, but sometimes you'll find in life that you're more focused on saving and investing or investing than, you know, paying off debt. You know, it's, it's hard to kind of have everything working at the same time, you know, uh, seamlessly. And they're very complex thing, complex disciplines on their own. Like the whole, uh, saving discipline, um, is very, is whole saving discipline is a whole concept on its own. It's a very vast and very intricate kind of process. Investing is a whole world essentially of concepts and ideas and theories. Debt management is a whole other concept of, you know, concepts and ideas and

disciplines. And, but what unites them all is essentially behavior. And one of the key things, you know, in my time now being a coach is when I started doing it, I was really more about the mechanics of everything. Like, you know, how to read an income statement, how to read a balance sheet, how to calculate a debt equity ratio, how to do a discount cash flow evaluation. Great. But at the end of the day, what really screws us up is really our behaviors, our emotions, our biases that we all inherit that can cloud our judgment and make our decision-making a lot harder. And as an investment coach, what I do is I try to make people at least more aware of their behaviors so they can not necessarily eliminate them because

it's impossible to eliminate these biases, but you're able to manage it better. Exactly. It's good to be aware. Yes, because if you can combine the technical number crunching, whatever you want to call it, side of investing or debt management or saving or whatever with the emotional side of it and have that awareness, I think that's your secret sauce. Totally. And that I think will separate. Does it guarantee success? No, but I think it puts you in a much better position to achieve success. And at the end of the day, it's about empowerment and not being dependent upon other institutions for achieving those goals. I totally agree. And that's one of, I think, the reasons that I've been so interested and passionate about personal finance for so long is because once I started educating myself, I realized how powerful that education

was. And I felt more in control of my life. And personal finance is a huge, huge element of your life. And once you feel like you've got an understanding and a hold on that, you know, it kind of, I don't worry about money. I tell that to people all the time. Like, I don't worry about my money because I understand what's going on with it. And it does, you know, evolve and change change but because i have that solid foundation and i think about it a lot i write about it and talk about it a lot it's not like this weird foreign mystery anymore it's like i i got it this is okay and i i can roll with the punches a lot easier yeah um one thing i i am curious about since you have been in the game for a while and you've helped quite a few people what are some of the most common questions that people ask you that they want to learn more about oh gee how much time do you have um the questions the type of it's not questions it's issues it's

it's decision making it's decision points right okay? And that people face. And it ranges really from someone who's just, you know, starting, finished school, got their first job. They've now got a little bit of cash now that they've been able to save and they want to start investing. And so I will get questions or their face, people are faced with that decision's like, how do I get the ball rolling? And so what I usually do in that kind of case would be for people that are just brand new, spanking new, what I do is I've developed some modules, learning modules. And what I do is I kind of spend time with them, kind of essentially teaching them some of the core fundamentals of investing in terms of how you make those investing decisions. And it really starts off with just understanding our capitalist system and understanding like, how do people, how do companies and individuals become wealthy? How do they make money? Because

we live in a capitalist society, but I think we use the term so loosely, we don't even know what it means. I know. And it's kind of crazy to me still that this is such a huge part of our lives, and it's not taught in schools. But anyways. It's taught, but it just doesn't jive with us at the time. Yeah, that could be it. So like a lot of things. For me, it was chemistry. That didn't jive with us at the time. Yeah, that could be it. So like a lot of things. For me, it was chemistry.

That didn't jive with me at all. Accounting, maybe I think it clicked with me there. But it's like I would just – in that kind of situation or that kind of decision point, I would walk them through understanding the fundamentals of how a company starts, how it raises money and how it raises capital and how it invests that capital and ultimately how it makes a profit off that capital. Because ultimately when you're investing, when you're buying a stock, you're buying a business. You're buying a company and you're buying people behind that company. And you need to have that – and you don't have to go get an MBA to figure this out. You just need to have a basic fundamental understanding of how wealth is created. Because if you've got that as a foundation, then when you start adding some layers to it in terms of understanding some of the metrics involved about it and be able to pick off some metrics from it, then you're going to be able to understand, hey, you know what? Apple, that's a pretty damn good company.

I think I'm going to want to look at that. And so it's about laying that foundation. So in that kind of situation, that's what I would do. And, and, uh, with, with a beginner, but at the same time, I'll get people, um, who are, I'll get a situation where I've got somebody who's, uh, three years away from retirement and they've got a pension. They know they're going to get a pension. Um, but they're, they're unsure about how to, you know, they've got a TFSA and they've invested in a bunch of mutual funds or stuff like that. And they don't feel very comfortable with them. And they're working with an advisor or something.

And they would come to me and basically ask me, you know, can you just take a second look at this and see, does this make sense? And the thing about coaching is it's not like I'm going to go and say, you know what, this is garbage or this is good or this is bad. It's about kind of walking them through the portfolio. And at the end of the day, I want them, I want the protege, I call people protege. I want the protege to kind of have the aha moment and say, you know what, this doesn't make sense what I'm doing. Or, oh, no, this is a really good thing. I think I'm on the right track. And so what I do in the conversation that I'll have with them is I'm going to ask them some questions about their individual,

you know, their components that are in their portfolio, walk them through some fundamental issues that they need to examine and that they may need to follow up with, with their advisor, questions that they may want to ask them. And it's really through that kind of interactive exchange that ultimately you want, I want the protege to have, be able to define the answer themselves. And that's really one of the fundamental differences between a coach, a coaching kind of relationship and the advisor relationship is an advisor is going to tell you what to do. They're going to say, Jessica, go put 20% of your money into bonds, 80% of your money into stocks because your risk profile is X. Here are the stocks you should buy. Here are the mutual

funds. Here are the ETFs you should buy. That's the advisor kind of relationship. A coaching relationship is where I'm essentially going to, first of all, give them some basic knowledge in terms of literacy, in terms of understanding what the various, like what an ETF is and what you need to look out for when you're evaluating an ETF or a stock or whatever. And really at the end of the day, it's the protege is the one that's going to make that decision. Right. So I'm not telling them they should do this. I'm just, we're having that conversation to facilitate and flesh out things that they think are ultimately going to be important.

Because at the end of the day, they're, they're accountable. Yeah, exactly. They're accountable for the, the decision that they take and the path that they take they're accountable for it and by through a coaching conversation it it really creates more empowerment for people so that's kind of um that's a kind of like that's those type of questions another question i'm getting a lot recently is a lot to do with because of the uh canadian dollar falling yes um it's made a lot of people kind of, people have had a little bit more hand-wringing.

They want to invest in US kind of stocks, but the dollar has gone down so much they're feeling like, oh, should I do that now? Does it make sense to invest in US companies or US stocks or US denominated assets? And I get questions about different strategies to deal with currency issues and things like that. And so a lot of times that

conversation is revolving around, I'm going to talk about different strategies in terms of how you can, you're not going to reduce your currency risk. You're going to have to manage it somehow. So there's different paths that you can go. And in a conversation that I've done in that area, I've gone through those kind of strategies. And at the end of the day, I'm not telling them, well, this is better than this. It's just here are these options out there that are traditional schools of thought. Whatever makes sense for you in your comfort level because it's all about comfort level.

Exactly, yeah. Then that would be your path. And so, yeah, I get a lot of that. Since the dollar has been going down, I've been getting a lot of those questions. Yeah, that's fair. That's fair. Yeah. One last question before I let you go, since I know you have a family and you're really

passionate about financial literacy, what are some of the kind of key things that you are going to educate your children about? So they'll be more informed when they're adults and they'll be able to maybe like tell their friends and we'll hopefully have a generation, the next generation and next generations will be a little bit more savvy when it comes to money. I think that's the key word is just to be more savvy about it. It's about being more engaged in the process. I think it's not just about understanding the mechanics of personal finance. I think it's also understanding your behaviors, your behavior and your attitude towards money. Because ultimately, your success and your ability to manage money and manage your finances is going to be dictated by ultimately your behaviors towards money. I definitely learned that.

20 years ago when I started investing, it was all about numbers and quantitative analysis and things like that. I can see now 20 years later that that stuff is still important. You still got to know some math. You got to know some formulas. But at the end of the day, it's more about awareness of biases and behaviors and controlling your emotions and develop an internal discipline towards money and a respect towards money. Because money is finite and it doesn't grow on trees. It doesn't.

Guess what? Surprise. And so you have to have a respect for it. And it's even capitalism. We live in a capitalist society. The fundamental basis of capitalism is money is scarce. Capital is scarce. And companies and businesses that can manage their scarce capital effectively are ultimately going to be the most valuable companies in the future. And so it's no different from taking that mindset and bringing it down to your own personal situation.

And that is some great advice. Thank you so much for tuning in to episode 27. Make sure to check out the show notes for this episode. All you have to do is go momoneymohavses.com slash 27. And if you like what you hear, I would really appreciate an iTunes review or a review on Stitcher or just a nice email. That'd be nice. Just saying. Just saying. Thank you so much again for tuning in, and I will see you back here next Wednesday.